UK electricity retailers are ramping up their efforts to sign power purchase agreements for PV projects.
On the back of high wholesale prices, U.K. electricity retailers are intensifying efforts to sign power purchase agreements with solar projects. Online PPA brokerage Renewable Exchange has reported the development, noting that 130 MW of solar PPAs have been signed in the last week alone.
Shortfalls in the supply of natural gas and challenging wind power generation conditions have resulted in high and highly fluctuating wholesale power prices in the United Kingdom. As a result, Renewable Exchange argued, energy retailers are showing a growing willingness to sign PPAs with solar generation assets.
Day-ahead electricity prices in the United Kingdom surged to almost GBP 425 ($585.60)/MWh for Sept. 15 – a record high – when an interconnector to France went down. Prices have been consistently high in recent months, remaining above GBP 100/MWh throughout August.
Given the price dynamic, it appears that U.K. utilities are looking to lock in supply. Renewable Exchange reports that 25 solar projects have signed PPAs with offtakers over the past week, totaling 130 MW of generation capacity.
“Generators now seek to secure their PPA contracts much further into the future, too,” says Chris Smith, chief commercial officer at Renewable Exchange. “Assets tendering through our platform this week will lock out as far as into 2024.”
Renewable Exchange is an online portal that allows renewable energy asset owners to enter into direct PPAs with offtakers – namely, U.K. electricity retailers. While primarily active in the United Kingdom, the platform has “recently” facilitated a wind power PPA in Germany, as part of its expansion on the continent.
With wholesale prices high in the United Kingdom and in many parts of Europe, Renewable Exchange says that it is seeing increased activity from offtakers looking to lock in renewable energy supply. Renewable PPAs both provide stability in terms of pricing and meet the surging interest from consumers in carbon-free electricity.
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“At the moment, the unpredictable weather, and the lack of security in terms of foreign gas supplies are causing massive swings [in wholesale electricity prices] within days,” a spokesperson for Renewable Exchange told pv magazine.
While the location and connection voltage of a solar project will influence the PPA price it can achieve, Renewable Exchange reported that indicative prices have roughly doubled on last year.
“For solar assets contracting with PPA start date in the next month or so, they could expect PPA values in excess of GBP130/MWh for power and embedded benefits on one-year long contracts,“ the spokesperson continued. “In May 2021 equivalent contracts would have obtained prices in the region of GBP 65/MWh.“
Renewable Exchange said that new offtakers have recently begun bidding for PPAs on its platform including Trailstone, Brook Green, Conrad Energy and Octopus Energy. They join companies such as Smartest Energy, EDF, Drax (previously Opus), Good Energy, Ecotricity, Ovo, Statkraft, Limejump, Total and Engie, according to Renewable Exchange.
The majority of renewable assets using the PPA platform are operational wind power assets, although Renewable Exchange added that some projects still in the development phase have been able to sign PPAs via its online service.
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Source: pv magazine
